Discom debt surges 24% to Rs 6.2 lakh crore in 2021-22

12 Apr 2023 CW Team

The total debt of India's power distribution sector increased by 24% from 2019-20 to 6.20 lakh crore in 2021-22. However, the rate of debt addition has slowed over the last two years, according to Power Finance Corporation's annual report on the sector.

According to the report, the sector's debt will rise by 33,800 crore in 2021-22, which is 60% less than the previous fiscal year's increase of 85,500 crore. Following tariff increases, loan takeover by state governments, and improvements in subsidy disbursement and bill collections, the sector's financial deficit was nearly halved in 2021-22 compared to 2019-20.

The financial deficit is an important indicator of the sector's financial health. The deficit was calculated on a cash-adjusted basis, with the emphasis on capturing cash flows rather than revenue accrued. Due to the impact of Covid-19, it compared 2021-22 performance to the previous two fiscals.

Power distribution companies' aggregate technical and commercial losses fell 5 percentage points to 16.5% in 2021-22 from 2020-21 and 3.4 percentage points from the previous year. According to the report, capital expenditure addition fell to 48,000 crore in FY22, compared to 59,000 crore the previous year and 83,000 crore in 2019-20.

The sector needs to actively focus on upgrading its billing infrastructure for long-term gains, it said. Subsidy disbursement by state governments was 102% of the amount booked in 2021-22, compared with 85% a year earlier and 95% in 2019-20.

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